Trading Exotic Pairs

Posted By Robert On Wednesday, November 26th, 2014 With 0 Comments

It is important to appreciate that exotic pairs are less traded than the majors and as such trading these pairs can be more expensive. In particular, the bid/offers spreads can be quite wide due to the relative shortage of liquidity in the underlying markets; in much the same way that an AIM share will not have as tight a spread as the Tesco price for instance.

Also, geo-political developments can sometimes lead to some wild moves in exotic currencies so be careful as if you are caught up on the wrong side of a move, losses can quickly add up. For instance a trade on the Russian rouble requires you to keep an eye on the oil price while the South Afrian rand is correlated to the gold price.

But if you understand and appreciate these risks, there is no reason for an experienced trader not to try trading those pairs.

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